Purcell 2003 ). On the other hand, when aWrm has expensive investments in
advanced technology, which requires highly skilled and careful handling, managers
are likely to adopt high-commitment HR models for core workers,even iftheir
competitive goal is to achieve the lowest unit costs in the industry (Godard 1991 ;
Steedman and Wagner 1989 ) (Table 3. 1 , second row). In eVect, where there are high
‘interaction risks’ between specialized capital assets (in which theWrm has major
‘sunk costs’) and the behavior of workers, managers are likely to adopt employ-
ment models that foster greater expertise and buy greater loyalty and care. As a
result, twoWrms which notionally have the same competitive strategy (in this case,
lowest unit costs) may move in diVerent directions in HR strategy once the
inXuence of technology factors and cost dynamics in their sector is considered.
There is potential for a similar kind of interaction in services where the appro-
priate question concerns how management chooses to handle the balance between
tangibles and intangibles in the service oVer (Lashley 1998 ; Lloyd 2005 ). Haynes
and Fryer ( 2000 ) illustrate this in their study ofWve-star hotels in Auckland. The
hotels all have excellent facilities, without which they cannot beWve-star hotels, but
this neutralizes tangibles as a form of competitive advantage and makes competi-
tion through intangible elements (service quality) the main way in which managers
of the hotels can try to outperform others in their market segment. Performance is
improved through better investment in human resources: through better systems
for employee appraisal, development, and two-way communication, which improve
service quality and customer loyalty. On the other hand, it needn’t operate this way
in services. In Lloyd’s ( 2005 ) study of BritishWtness centers, managers in the
more highly pricedWtness centers typically decided not to compete through the
quality of employee skills and, thus, the ability of their employees to advise
customers intelligently on appropriateWtness regimes. Tolerating high rates of
labor turnover, managers opted to compete through the quality of their facilities
(more luxurious and spacious premises with a greater range ofWtness devices and
free grooming products) and not through people. Thus, in this case, a premium
service oVer did not translate into high investment in human resources. While high
service prices are often associated with high-commitment models of HRM, as we
will note later in this chapter, managers in serviceWrms may opt instead to compete
through the tangible elements of the service oVer. As in manufacturing, then, we
must be careful with deductions directly from competitive strategy to HR strategy
or with models that suggest the former is the only key inXuence on the latter.
Besides the impact of technology or tangibles, reviews of ‘bestWt’ models in
HRM have noted how employer goals vary with the characteristics of employees
and the state of labor markets (e.g. Boxall 1992 , 1996 ; Lees 1997 ). LargeWrms often
adopt one set of goals for managing their management cadres (particularly senior
managers) and another set for the rest of the workforce (e.g. PinWeld and
Berner 1994 ; Purcell 1987 ). In terms of managers, models of HRM typically involve
much greater investments—either in building the clanlike, long-term loyalty that
the goals of hrm 55